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The “Greater” wealth transfer: Capitalizing on the intergenerational shift in wealth

Read about the key challenges facing wealth management transfer firms as they seek to maintain and capture the next generation of investors.

OVERVIEW

Intergenerational transfers of wealth create risks and opportunities for the wealth management industry. Over the next 30 to 40 years, $30 trillion in financial and non-financial assets is expected to pass from the Baby Boomers to their heirs in North America. Navigating this latest transition will be critical.

In this report, Accenture examines the key challenges facing wealth management firms as they seek to maintain Boomer loyalty and capture the next generation of investors. Learn what sets Boomers apart from their heirs and how firms can appeal to these distinct client bases.

BACKGROUND

Right now, more than $12 trillion in financial and non-financial assets is in the process of being shifted from the Greatest Generation—those born in the 1920s and 1930s—to Baby Boomers born between 1946 and 1964. Over the next 30 to 40 years, an additional $30 trillion in financial and non-financial assets will pass from Boomers to their heirs in North America alone. At the peak, between 2031 and 2045, 10 percent of total wealth in the United States will be changing hands every five years.

Capitalizing on these intergenerational shifts in wealth will be critical for the long-term success of wealth management firms.

ANALYSIS

Most wealth management firms are unprepared for the significant intergenerational wealth transfer underway between Baby Boomers and their heirs. In fact, many firms struggle to manage the estate execution process altogether.

Did you know that only 6 percent of households use the estate planning services of their primary wealth advisor? Or that the primary cause of attrition is client deaths and the resulting asset dispersion during estate executions? In addition to retaining the loyalty and assets of Boomers, wealth management must capture the next generation of heirs.

Two key challenges stand out:

The average age of North American wealth advisors is increasing. As they near retirement, advisors may be less motivated to build foundational relationships with their clients’ children.

Boomers and their heirs have different attitudes toward investing and advisors. Boomers tend to be comfortable with the advisor-led model, while their social media-savvy heirs often demand greater transparency and control.

RECOMMENDATIONS

Firms seeking to retain and capture assets as Baby Boomers transfer wealth to their heirs must:

Build family estate planning capabilities. The more that a firm knows about the plans of Boomers and their heirs, the more it can do to proactively retain their assets.

Establish go-to-market strategies for heirs. Matching heirs with relevant firm offerings now is an important step in retaining assets as they are transferred across generations.

Help clients navigate their inheritances. By supporting heirs during the difficult experience of a death in the family and making the process less stressful, firms can build relationships.